Want to work at a bank in Hong Kong where your bonus is paid entirely in cash and none of it is deferred, leaving you free to move jobs without sacrificing future income? Try a Chinese firm.
An investment banking recruiter in Hong Kong, who asked to remain anonymous, has surveyed 20 leading Chinese banks and securities firms and found that they all pay cash bonuses to the overwhelming majority of their staff.
Sources within listed Chinese banks tell us that only very senior managers receive any stock. “My bonus is all cash, calculated as a percentage of base salary, with no deferrals of my money,” says a mid-level banker at CICC.
Despite CICC having listed in Hong Kong in 2015, the banker says only MDs are receiving stock options as part of their bonus package. “There’s no stock at my level – cash is definitely better as it's more secure and liquid,” she adds.
Another source at CICC in Hong Kong confirmed to us that he receives all his bonus in cash. A banker at BOCI, whose parent company Bank of China listed in Hong Kong 10 years ago, says the cash component of his bonus is also 100%.
She adds that “cash bonuses are definitely better than stock” because you can change banks after receiving your bonus without the additional burden of giving up stock which has not yet vested.
While Chinese banks in Hong Kong typically offer lower base salaries than their Western rivals, their bonuses can actually be larger, says Maggie Li, a director at recruiters Executive Access.
“The bonus component of total earnings at global banks has been decreasing, so experienced candidates are increasingly open to opportunities in Chinese banks and securities firms due to potentially better bonuses,” says Juliana Chung, a managing consultant at recruiters Michael Page in Hong Kong.
While CICC has adopted the Western practice of paying a single bonus around March, smaller mainland firms in Hong Kong are spreading out their payments. “The boutique Chinese firms usually divide their bonuses into three instalments – typically before Chinese New Year and then in May and December,” says Chung.
These regular payments help “incentivise employees to stay,” adds Mirjam Gustafsson, a senior consultant at recruiters Robert Walters in Hong Kong. “Chinese banks in Hong Kong mainly use this strategy for front-office positions in corporate finance and M&A.”
Still, employees at Chinese banks are not always enamoured with their bonuses. “My performance last year was good and the bank did ok, but my team’s performance was bad, so I end up getting a below-expectation bonus. Team performance is important to the calculation,” says the first CICC banker.
“Feedback from candidates on bonuses at Chinese firms is mixed,” says another Hong Kong-based recruiter. “We’ve seen cases where bonuses have been delayed or even not paid in certain years, while other employees have been pleasantly surprised with their bonus.”
The second CICC employee we spoke with says bonuses won’t dictate his future career plans. Ultimately he’d like to work at a Western bank because “the working culture is better”.
“Many junior candidates are willing to go to international banks even if the total compensation is lower just to have a well-recognised brand name on their resume,” adds Chung from Michael Page.
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